Fitch Affirms PMI's Ratings Upon FGIC Announcement.

Business Editors

NEW YORK--(BUSINESS WIRE)--Aug. 4, 2003

Fitch Ratings affirms PMI Mortgage Insurance Co.'s (PMI) 'AA+' insurer financial strength (IFS) rating. The Rating Outlook on the IFS rating remains Stable. Fitch also affirms The PMI Group, Inc's (TPG) debt ratings (see below for a complete rating listing). The Rating Outlook on the debt ratings remains Negative.

This rating action is in response to TPG's announcement that it will serve as the lead strategic investor of a consortium group assembled to acquire Financial Guaranty Insurance Co. (FGIC) from General Electric. The other members of the consortium includes The Blackstone Group, The Cypress Group, and CVIC Partners (owned by Bank of America). For its $607 million investment, TPG will own approximately 42% of FGIC. The FGIC transaction furthers TPG's diversification strategy, in general, and its long-standing interest in financial guaranty, in particular.

Fitch has analyzed the transaction's operational and financial impact on TPG and has considered such in its rating action. Approximately half of TPG's $607 million share of the purchase price will come from internal proceeds and the remainder will come from a combination of an approximate $200 million offering of mandatory convertible securities and an estimated $100 million common equity issuance. The meaningful equity composition of this financing strategy results in only a modest increase in TPG's debt leverage - as measured by the ratio of debt to total capitalization - from approximately 16.2% to approximately 17.3%.

TPG is a California-based holding company whose primary operating company is PMI, an Arizona-domiciled mortgage insurance operating company. Although TPG derives revenues from subsidiaries other than PMI and businesses other than US mortgage insurance, the organization's ratings are based predominantly on the financial position of PMI. At year-end 2002, TPG reported $3.5 billion of GAAP assets and $2.2 billion of GAAP shareholders' equity. For the same period, PMI, along with its four operating insurance affiliates, reported $2.9 billion of statutory assets and $2.4 billion of statutory surplus (including contingency reserves).

PMI's very strong IFS rating reflects its top competitive position in the mortgage insurance industry, strong earnings performance and subsequent capital generation capabilities, and solid overall risk-adjusted capitalization. Partially offsetting these positives are a slow but steady decrease in the quality of its insured loan portfolio over the past few years, including growth in higher loan-to-value (LTV) and less-than-A-quality loans, and the continued proliferation of captive reinsurance and other business-sharing arrangements.

The Negative Rating Outlook on TPG's debt ratings is primarily indicative of a company trend towards more active management of the holding company's capital structure, including an expanded debt leverage appetite, coupled with Fitch's revised guidelines on the notching between insurance organizations' IFS and debt ratings. Also considered is the continuation, and even growth, of TPG's expansion into new business lines and the execution and deal risk associated with this behavior.

FGIC's 'AAA' IFS rating is also affirmed by Fitch (see separate press release available on the Fitch Ratings web site at 'www.fitchratings.com').

Entity/Issue/Type              Action       Rating/Outlook

PMI Mortgage Ins Co  IFS

--Insurer financial strength   Affirm       'AA+'/Negative;

PMI Group, Inc

--Long-term issuer             Affirm       'AA-'/Negative;

PMI Group, Inc

--6.75% notes due 2006         Affirm       'AA-'/Negative;

PMI Group, Inc

--2.50% debentures due 2021    Affirm       'AA-'/Negative;

PMI Capital I

--8.31% securities due 2027    Affirm        'A+'/Negative.